China blackmail markets in everything

In Beijing, I met Benjamin Liebman, a professor at Columbia Law School, who has published a study on “malpractice mobs” in China. He told me that protests consistently extract more money from hospitals than legal proceedings do. Family members can even hire professional protesters. One report in Shenzhen mentioned an average price of fifty yuan a day for the service of a protester. The radiologist in Shanghai told me, “If your mother dies in the hospital, there will be an agency that comes to you and says, ‘We can help you. We can have twenty guys who can come to the hospital, blackmail them, and share fifty per cent of the profits.’ They’re very professional.”

…or to elaborate, if it’s against the law to extort, and against the law to clamor for democracy, then either the cost of being a dissident is much higher than the cost of being an extortionist (both illegal), or, logically, the Chinese are more interested in money than democracy.

It’s more that when the government is unaccountable to the people directly, and the law is difficult and its enforcement often corrupt, people resort to various kinds of ground-up action and extralegal stuff. It’s the same reason why they have tons of wildcat strikes.

@dan1111 – the fact that enough people are doing it to be reported makes my point. When all 1.3 billion (an exaggerated number btw, the population of China is likely 30% less than the official figures) engage in this behavior, then that would make your point.

This doesn’t seem like that inefficient of a system. Instead of a few legal system experts extorting rents by threatening expensive litigation we have unskilled labor extracting rents. The court of public opinion might be less well calibrated towards truth finding than courts of law, but both are largely zero sum games and transaction costs are lower if specialized experts stay out of things.

How is this different that the pervasive “accident injury” litigation practice in North America? Largely it does not matter if you are really injured or not as long as you hire the right agency that will legally extort the insurance company of the other invilved party.